Skip to Content
Tally logo

What Are Digital Wallets and Are They Safe?

Digital wallets are becoming increasingly popular. Read on to learn how to use a digital wallet and what the benefits of using one are.

March 15, 2022

Digital wallets — also known as e-wallets or mobile wallets — are rising in popularity and for good reason. These software-based wallets are capable of storing multiple payment methods and passwords for various websites, which can make it easier to keep your digital and financial life organized. 

Keep reading for more insight into how to use a digital wallet.

What is a digital wallet?

If you think you don’t know what a digital wallet is, you’ll probably be surprised to find out there’s a good chance that you already have one. FIS PACE discovered that 32% of mobile wallet users had three or more mobile wallets already downloaded onto their smartphones in 2021. By 2025, it’s anticipated that one in every two consumers will use a mobile wallet, according to the 2021 Mobile Wallets Report from Boku. The point is, digital wallets are becoming more commonplace and are something we all should be aware of.

So, what is a digital wallet exactly? A digital wallet is basically just an electronic version of your everyday physical wallet. Digital wallets can store:

  • Credit card information

  • Tickets

  • Boarding passes 

  • Store loyalty cards 

And so on. You can usually access a digital wallet from a tech device like your smartphone, computer, tablet or smartwatch. 

Having a digital wallet can slim down your physical wallet or store a backup of payment methods on your phone. Paying with a physical wallet is also usually pretty quick and painless — something many shoppers appreciate when they’re in a hurry.

Here’s a few examples of different types of digital wallets that are popular at the moment (some of which you may not realize you already have):

  • Apple Pay®

  • Fitbit Pay™

  • Garmin Pay™

  • Google Pay™

  • PayPal

  • Samsung Pay®

  • Venmo

  • Zelle®

How to use a digital wallet

Figuring out how to use a digital wallet isn’t as hard as it sounds. Digital wallets can usually be accessed by an app that you can easily download and add to your smartphone, smartwatch, computer or tablet. 

To shop in person with your digital wallet, you simply hold your device attached to the wallet near a payment terminal that accepts digital wallet payments. Keep an eye out for the contactless symbol that is made up of four curved lines. You may need to use a passcode or authenticate your purchase through fingerprint or facial recognition.

If you’re shopping online, such as from a computer, you may need to log in to your digital wallet to use it in making a purchase, which can save you from having to go find your credit card and type in all of the information required to make the purchase. You can also use digital wallets to make in-app purchases (just make sure your kids can’t access this feature or you may end up with a hefty Minecraft bill). 

Depending on the app, you may be able to pay individuals directly, which makes wrapping up that happy hour bill a breeze. Need some good old-fashioned cash? Sometimes you can also use your digital wallet to get cash from an ATM. 

Are digital wallets safe?

Now that you know how to use a digital wallet, you’re probably wondering just how safe this whole process is. 

In some ways, a digital wallet is safer than a physical one — you can’t lose it and you don’t have to let anyone else see your card’s information. When you check out in person using a digital wallet, you’ll have a unique token number assigned to your credit card. The merchant only sees this number, not your actual credit card number. Every transaction you make will require a unique, encrypted code to use with that token to make the purchase extra secure. 

If the device you have your digital wallet on is lost or stolen, you can ensure no one can access your device’s data by using an app that allows you to remotely lock or erase information from a distance. You can also set up additional security measures to use the digital wallet such as fingerprint recognition and password protection, which will make your device more secure. It’s important to take these extra security precautions sooner rather than later to protect yourself if your phone is lost or stolen.

Pros and cons of a digital wallet

Like any financial product, there are advantages and disadvantages associated with digital wallets that are worth considering.


  • Faster checkouts. Whether you’re shopping in person or online, a digital wallet can speed up the checkout process.

  • Stronger passwords. With digital wallets, you can create stronger passwords for your many online accounts and securely store them in one place so you never have to worry about forgetting them.

  • Convenience and organization. You can store payment methods, rewards cards, and tickets in your digital wallet at all times, making it possible to skip carrying a physical wallet.


  • You need a backup plan. As neat as digital wallets are, they rely on you having a device with a charged battery to function. This isn’t a concern while shopping online at home, but you may not feel comfortable leaving home without your actual wallet, or at the very least, a portable charger on you. 

  • Not accepted everywhere. Again, online shopping won’t cause problems here, but smaller brick-and-mortar stores and certain service providers (like your hairstylist or housekeeper) may not accept mobile payments.

Sick of carrying around the weight of a heavy wallet and credit card debt? Tally† is a credit card debt repayment tool offering a lower-interest line of credit that can help streamline your repayment process. 

​​†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.